Vietnam’s Ministry of Finance has introduced a significant proposal aimed at empowering small and medium-sized enterprises (SMEs). The initiative suggests that SMEs be permitted to use digital assets, virtual assets, and intellectual property as collateral for bank loans. This move is part of a draft revision to the Law on Support for SMEs, which is currently under public consultation.
New Opportunities for SMEs
The proposed changes aim to broaden the types of collateral available for business loans. Under the draft law, SMEs may utilize various asset categories, including:
- Digital assets
- Virtual assets
- Intellectual property rights
- Future-forming assets
- Intangible assets
- Other lawful properties
This policy marks a shift away from the traditional focus on real estate and fixed assets, which have limited the ability of many SMEs to secure funding. The Ministry of Finance identified a persistent credit gap and seeks to enhance access to capital, particularly for technology startups and private enterprises.
Addressing the Credit Gap
Data from the State Bank of Vietnam indicates that outstanding loans to SMEs reached approximately VNĐ3.8 quadrillion (around $144.2 billion) by the end of April. Despite SMEs and household businesses constituting over 98% of all businesses in Vietnam, they only account for about 20% of total credit in the banking system.
Credit Assessment Beyond Collateral
The draft legislation also encourages banks to evaluate creditworthiness using a broader set of criteria. Institutions may assess borrowers based on:
- Business plans
- Market expansion potential
- Enterprise cash flows
This multifaceted approach allows lenders to gauge credit risk without relying solely on fixed assets. The Ministry of Finance’s proposal aligns with the Politburo’s Resolution 68-NQ/TW, which emphasizes the importance of the private sector in driving economic growth.
Legal Framework for Digital Assets
This initiative coincides with Vietnam’s ongoing efforts to develop a comprehensive legal framework for digital assets. The country is reportedly piloting a domestic digital asset exchange and revising regulations on overseas cryptocurrency trading. However, it is important to note that not all digital or virtual assets will be accepted by banks as collateral. The draft stipulates that assets must conform to Vietnamese legal standards, underscoring the need for appropriate valuation, custody, and risk management practices before the new rules can be fully implemented.
